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CIRCULAR No

CIRCULAR No. 73/2000/TT-BTC OF JULY 19, 2000 GUIDING THE 2001 STATE BUDGET ESTIMATION

In furtherance of the Prime Minister�s Directive No.13/2000/CT-TTg of July 17, 2000 on elaboration of the socio-economic plan as well as State budget estimate for 2001, the Finance Ministry hereby guides the assessment of the implementation of the 2000 State budget and the estimation of the 2001 State budget as follows:

A. ORGANIZING THE ADMINISTRATION AND ASSESSMENT OF THE IMPLEMENTATION OF THE 2000

STATE BUDGET

I. ORGANIZING THE ADMINISTRATION OF THE STATE BUDGET FOR THE LAST 6 MONTHS OF 2000

The results obtained in implementing the socio-economic tasks and the State budget in the first 6 months of 2000 show that the socio-economic situation has seen positive changes with many important economic development targets rising over the same period last year. A number of key industrial products have found a fairly good sale while the volume of goods left in stock has reduced. The State budget revenue (domestic revenue) has represented 50.9% of the annual estimate, rising by 3.7% over the same period of 1999.

However, the obtained results remain unstable, the market prices continue to drop, particularly that of farm produce, thus affecting the goods consumption and circulation. The State budget revenues in some domains were lower than those of the same period last year and did not yet keep pace with the economic recuperation. The budget disbursement for expenditure in a number of ministries and localities remain slow, the completed volume of capital construction projects under the 2000 plan has been recorded low, the foreign direct investment continues to shrink and a number of national target programs are very slow to get off the ground; the State budget expenditure has represented only 43.7% of the annual estimate, in which the expenditure on capital construction achieved only 37.4%. The realization of the policy of socializing education, healthcare, cultural as well as physical training and sport activities has been at a snail�s pace.

Stemming from the above-mentioned situation, the ministries and localities are requested to base themselves on the socio-economic objectives and tasks as well as the budget revenues and expenditures assigned by the Government for the whole year to continue applying in the last six months of 2000 the measures mapped out at the beginning of the year, focussing on the following major measures:

1. Regarding the State budget revenue:

- Enhancing the direction of production and business activities as well as the consumption of products, particularly farm products as well as export goods, so as to create firm foundation for the fulfillment and overfulfillment of the task of the 2000 State budget collection and remittance.

- Concentrating efforts on tapping all revenue sources without missing any revenue or permitting any revenue reduction. Focussing on revenue sources expected to yield higher such as land and housing tax, charges and fees, income tax, industrial and commercial as well as service taxes from non-State sector, etc., and at the same time definitely handling the final tax settlement and the inspection of the 1999 tax settlement, immediately collecting outstanding amounts left from previous years according to the final tax settlement.

- Guiding enterprises in the accounting work of recording, using and managing invoices in order to avoid mistakes and combat fake invoices. Gradually raising the rate of tax declaration and accounting book opening by subjects liable for payment by direct method. Linking examination with guidance for enterprises to do well the accounting work, the making of tax declaration form. Assisting and urging enterprises to declare tax according to law provisions.

- Continuing to implement the policy of publicity of the processes of: declaration, notification of tax amounts to be paid, exempted, reduced or refunded so that all tax payers may know them for implementation and be given favorable conditions to supervise one another and to supervise tax officials. Effecting the tax reimbursement in time, according to law and quickly, without causing any problems for tax payers.

- Stepping up the work of examination and inspection of the observance of tax laws, focussing on tax exemption and reduction, VAT deduction and reimbursement, the observance of regime on invoices, vouchers, accounting books by tax payers, with particular attention being paid to foreign-invested enterprises and non-State enterprises.

2. Regarding State budget expenditures:

For the administration of budget in the last 6 months of 2000, to focus on the application of the following measures:

- Accelerating the capital construction, completing as soon as possible all procedures so as to have bases to make advance payment and allocation to the completed volumes as prescribed, ensuring adequate capital for projects which have gone through all procedures, with attention being paid to reviewing the capital construction projects, which have been inscribed in the estimate but lack the implementation conditions or which are deemed inefficient, hence must be stopped, readjusted for other projects with implementation conditions; not leaving capital in the state of awaiting projects. Promptly removing difficulties and problems so as to step up the disbursement of ODA capital (such as ground clearance, simplification of administrative procedures, arrangement of adequate reciprocal capital�).

- Stepping up the timely fund disbursement and allocation for target programs included in the estimate at the beginning of the year, particularly the project for planting of 5 million hectares of forests, the hunger elimination and poverty alleviation program and the program for socio-economic development in mountainous, deep-lying and remote communes meeting with great difficulties. The People�s Committees of localities shall direct and ensure the full and timely transfer of capital to the State Treasury for payment.

- In order to ensure the State budget administration in strict accordance with the estimates and keep the State budget deficit at the level already approved by the National Assembly, the central and local budgets shall use their reserve only to perform important tasks newly arising at the beginning of the year and having not yet been allocated the funding, and to cope with natural calamities such as storms and floods or hunger relief, which may occur� The ministries and localities take initiative in administering their budgets according to the budget expenditure estimates assigned by the Government; not to make supplements outside the estimates for units at central level and in provinces as well as centrally-run cities.

The localities shall have to base themselves on their budget revenue capabilities to regulate the budget expenditures:

+ For localities which may achieve the budget revenues higher than the estimates, the excess revenue amounts should be used with priority as capital supplement to local socio-economic infrastructure projects, to the program on solidification of inter-field canals; projects to be completed in 2000, supporting the production and business development, the improvement of plant varieties and animal breeds; repayment of capital borrowed for investment in socio-economic infrastructures and the capital borrowed by communes for investment in capital construction; raising the financial reserve fund; not supplementing expenditure for administrative management; expenditure for procurement or repair of equipment, which is not actually urgent.

+ For localities where the revenues may be lower than the estimates, it is necessary to increase revenues from sources which can yield higher revenues in order to achieve the revenue estimates assigned at the beginning of the year; at the same time to take initiative in rearranging spending tasks in conformity with the revenue sources of the local budgets on the basis of ensuring funding for such important socio-economic tasks as expenditures for investment in agricultural and rural development, education and training, science and technology, social security�.

II. ASSESSMENT OF THE IMPLEMENTATION OF THE 2000 STATE BUDGET, WHICH SHALL SERVE AS BASIS FOR THE ESTIMATION OF 2001 REVENUES AND EXPENDITURES

1. Regarding the State budget revenue:

On the basis of the implementation situation in the first 6 months of the year, to evaluate the 2000 revenue results based on the application of measures for fulfilment and overfulfilment of the assigned estimates in Decision No.91/1999/QD-BTC of December 29,1999 of the Finance Minister, focusing on the analysis of some following issues:

- Clearly determining the tax amount carried forward from 1999; the amounts already recovered in 1999; the outstanding amounts, clearly stating the reasons therefor and remedial measures. Thereby, determining the amount arising in 2000; the amount already collected in the year and the amount expected to arise in 2000 and be carried forward to 2001.

- The value added tax amounts to be refunded in 2000; the amount already refunded to enterprises in 2000; the amount expected to be refunded in 2000 and carried forward to 2001.

- Analyzing causes which affect the results of the implementation of collection in 2000; the implementation situation as compared to the plan with regard to norms on the outputs of major products, production and consumption, production costs, selling prices�.

- Analyzing the impacts of the amended and/or supplemented regimes and policies on the sources of revenue in the localities.

1.1. The State enterprise sector:

- Firmly grasping the production and business situation of enterprises, evaluating the situation on capital and assets, debts, the increase and decrease in original prices of fixed assets; the number of laborers, wages, turnover, production cost, economic and technical norms, the production and consumption of major products, the earned profits and budget remittance amounts.

- Analyzing and evaluating the results of the work of organizing the revenue management and the situation of implementation of the operational process of tax management. Difficulties and advantages in 2000, the possibility of development in 2001 and the subsequent years.

1.2. The non-State industrial, commercial and service sector:

a) Management of collection from subjects that pay VAT by deduction method:

- Evaluation of the tax calculation, declaration and payment of units.

- Changes in the number of management subjects in 2000 against 1999.

b) Management of collection from subjects that pay VAT by direct method:

- Through the work of tax code registration and granting; to evaluate the management of collection from households; the number of households which have declared and registered tax and been granted tax codes against the number of households actually conducting business; the number of households which have already been granted the business registration.

- The management of turnover against the actually achieved turnover; the situation on declaration and adjustment of turnover, added value, taxable income and tax of subjects; the level of adjustment of turnover, VAT and tax for each commodity group.

1.3. Foreign- invested enterprise sector:

- The total number of enterprises already licensed, the number of expired licenses, the number of dissolved enterprises, the number of those still valid, including the number of enterprises having started production and business, the number of enterprises being under construction, the number of enterprises having not yet commenced operation.

- The total labor, the total wage fund, turnover, expenditure and production and business efficiency.

- Evaluation and analysis of the amounts collected from contractors, subcontractors in localities, particularly the petroleum contractors.

1.4. Agricultural land use tax:

- On the basis of the agricultural land use tax register, to evaluate the results of additionally tapping the acreage due to be liable to tax into the tax register; the result of tax debt collection, paddy price for tax calculation� against the estimate assigned by the State.

- For the State enterprises, the above norms must be separated into a section and there must be details on pilot enterprises with big amounts to be collected.

1.5. Land and housing tax, land rental:

- To synthesize the registered land acreage for management of collection against the land fund in localities under management.

- To clearly analyze the following norms:

+ The number of enterprises, acreage of land being in use.

+ The number of enterprises, the land acreage and land rental already recorded in the tax register.

+ The number of enterprises, the land acreage and the land rental unable to be collected; to clearly analyze the reasons therefor (as the land rent contracts have not yet been signed, the land areas have not been fully used by the units, and other reasons).

1.6. Revenues from land allocation and house sale:

- Evaluating the situation of land use right-granting fee debts. Analyzing cases of deliberately delaying the payment and proposing remedial measures.

- Evaluating the impacts of a number of new policies promulgated to step up the granting of house ownership and land use right certificates, such as the policies of reducing the prices of apartment houses, providing support in land allocation money for subjects with meritorious services to the revolution, reducing the house prices according to public servants� working seniority,� lowering the house prices against the actual prices.

1.7. Sources of charge and fee collection in localities:

- Evaluating the results of tax code granting to units with revenue against the enhancement of charge and fee collection management.

- The situation on charge and fee collection and payment by central organizations, provinces, districts, communes and wards with charge and fee collection: the amounts collected, permitted to be retained, remitted into budgets.

2. Regarding State budget expenditure:

2.1. Regarding expenditure on capital construction: Focusing on revision and classification of all projects and constructions in the 2000 investment plans of the ministries, branches and localities; evaluating the volume performed in the first 6 months of the year, the capital amount already settled in the first 6 months for each project, construction; thereby handling capital according to the principles:

- Allocating capital first of all to investment projects and works in service of development of agriculture and rural economy (irrigation, dikes), natural disaster prevention and combat, research, improvement and production of plant varieties and animal breeds.

- Allocating capital to group A- projects, reciprocal capital for ODA projects, projects to be completed in 2000.

- Resolutely suspending and dropping projects which have not yet gone through the investment procedures; projects which are deemed inefficient or unnecessary.

2.2. For expenditures on the construction of socio-economic infrastructure projects, social welfare projects, housing fund development, investment in agricultural and rural development, local budget expenditure on regeneration of forest fund from the sources of land use right levy, land rental, the sale of State-owned houses, the construction lottery, agricultural land use tax, forest resource tax, the localities should evaluate in detail the possibility to implement each revenue amount in order to properly administer the expenditures; where revenues are below the estimates, the expenditures should be correspondingly cut; expenditures shall be effected only when they are covered by actual revenues in order to avoid debts due to lack of sources for payment to completed volume.

2.3. For target programs: Based on the funding estimates already assigned and the implementation tempo, the agencies managing the target programs and the localities should evaluate the volume of work implemented in the whole year of 2000 (based on the total funding amount assigned by the State and the list of announced target programs, assessment of the situation of distribution, integration and allocation for target programs); the volume of work and funding implemented from the time when the target programs were available to the end of 2000, thereby to make specific proposals on proper mechanism and to have grounds for the estimation of expenses for the implementation of programs in 2001. Classifying important national target programs to be retained; the remaining target programs shall be transferred to regular expenditures of ministries and localities.

2.4. For regular expenditures: Based on the budget estimates assigned at the beginning of the year and sources of revenues to be retained as well as the tempo of implementation of tasks to evaluate the possibility of implementation for the whole year close to the actual situation of the ministries, localities or units. The evaluation of the whole year�s expenditures should clearly analyze expenditures from allocated budget and expenditures from the retained revenues according to the prescribed regime, including the structure of spending on wages (including the increased wages), amounts of wage characters and compulsory wage-based deductions (social insurance, medical insurance, trade union fee,�), regular professional expenditures as well as unexpected or irregular expenditures (procurement, repair�) to be used as basis for calculating the allocation in 2001.

B. THE 2001 STATE BUDGET REVENUE AND EXPENDITURE ESTIMATION

I. THE OBJECTIVES AND REQUIREMENTS OF THE 2001 STATE BUDGET REVENUE AND EXPENDITURE ESTIMATION

1. Requirements:

- The 2001 State budget revenue and expenditure estimation should be made under the guidelines of the 10th plenum of the Party Central Committee (the VIIIth Congress), and in accordance with the objectives and tasks of the five-year (2001-2005) socio-economic development plans of branches and localities.

- The 2001 State budget estimation must exert positive impacts, creating a stable environment for production and business activities, boosting production and business, creating stable and firm sources of revenues, increasing accumulation and contributing an important part to further consolidating the country�s capability and potentials and creating momentum for development in subsequent years.

- Creating positive changes in restructuring the State budget, practicing economy, combating wastefulness alongside the perfection of apparatus, streamlining the administrative staff, Party and State agencies, mass organizations, increasing expenditures for development investment, for education and training, science and technology, ensuring funding for performance of defense and security tasks, further improving the wage regime, raising food rations for combatants in the armed forces ( army and police), the regime of financial support for persons with meritorious services to the revolution, the implementation of hunger elimination and poverty alleviation program, State budget-related social allowances. Taking an important step in socializing education, healthcare, cultural, physical and sport activities in order to mobilize more resources for branch development.

- The State budget estimation must comply with the provisions of the State Budget Law and documents guiding the implementation thereof, comply with the regulations on tasks and powers, organizing discussion of the budget and contents of budget estimation reports, ensuring grounds and bases for calculation as required by set forms and tables and according to report-sending timelimit.

2. Objectives:

The State budget revenue estimates must be made on the basis of production-business targets, in accordance with the current tax laws and revenue regimes while the continued handling of problems arising from the enforcement of new tax laws must be taken into account; the promulgated mechanism must be fully observed in order to encourage production and business, step up the export and expand markets. In the export and import tax revenue estimation, the factors of implementing the process of joining AFTA as well as other international commitments of the State must be taken into consideration; the price fluctuation must be anticipated, ensuring that the revenue estimates are higher than the previous years, more stable and highly feasible.

The 2001 State budget revenue estimation must ensure its conformity with the economic growth rate and price indexes, based on the full exploitation of all revenue sources and the combined measures against revenue reduction, smuggling and trade frauds; striving to make the national State budget revenue in 2001 represent 18- 19% of the GDP, and the local budget revenues in 2001 rise at least 10% over 2000.

b) The regular expenditure estimates should be made at a necessary, rational and economical level; implementing on the trial basis the financial mechanism of self-financing in a number of non-business units with revenue under the Prime Minister�s decision to be issued.

Continuing to give priority to the cause of education and training, science, technology and environment according to the Resolution of the second plenum of the Party Central Committee, to the cause of culture and information according to the Resolution of the fifth plenum of the Party Central Committee, as well as to agricultural and rural development. Abolishing the mechanism of the State budget subsidies for enterprises; scientific research, healthcare and training activities must be linked to production and business activities of corporations which must self-finance their non-business activities (except special cases to be decided by the Prime Minister).

For target programs: To arrange the national target programs, transferring a number of target programs which are no longer the national target programs into the tasks of regular expenditures of the local budgets.

The capital construction expenditure estimates belonging to the 2001 State budget capital must be made along the direction of: concentrating on the construction of infrastructure projects which can neither yield profits nor recover their capital, giving investment capital priority to key projects of the State and localities, allocating reciprocal capital to ODA-funded projects according to the time- tables already concluded, and capital to irrigation projects against storms and floods as well as the program on solidification of in-field canals. Concentrating capital on projects left from previous years and to be completed and commissioned in the year, the repayment of loan capital advanced in the previous years and on the efficient projects carried forward from 2000; the remaining capital amount shall be allocated to new projects which fully meet the prescribed conditions.

The budgets of all levels shall reserve 3 - 5% of their respective total budget expenditures as prescribed in the Government�s Decree No.87/CP of December 19, 1996. To make supplement to the financial reserve fund at a necessary and rational level.

c) State budget balance:

- The tax and charge collection must ensure the regular expenditures at a rational and economical level and ensure the repayment of due debts, continuing to arrange funding for effecting the wage regime regulation; to reserve an appropriate accumulation portion for development investment.

- The State budget overspending must be compatible to the firm possibility of domestic borrowings and preferential foreign loans. Not issuing money, not making foreign commercial borrowings; restricting domestic short-term borrowings with high interest rates to make up for the State budget deficit. The deficit level must not exceed 5% of the GDP (excluding borrowings for sub-lending).

d) With regard to local budgets at all levels:

- The estimates of the 2001 local budgets of all level shall be made and decided according to the State Budget Law; as the 2001 budget is the budget in the period of stability (2000-2002), the local administrations at all levels shall organize the estimation of their own budget revenues and expenditures on the basis of their revenue sources determined with firm grounds;

+ The proportion of division of revenue sources between the central budget and local budgets shall be stabilized on the basis of the revenue source- dividing proportion assigned in 2000 by the Prime Minister.

+ The supplementary amount from the central budget (if any) to balance the local budgets shall be 3% higher than the level assigned in 2000 (excluding the targeted supplements, supplements for settlement of difficulties of 2000 and funding for effecting the new wage regime).

- Within the scope of the revenue source determined above, the local budget expenditure estimates shall be made, ensuring the principles: the total expenditure shall not exceed the total revenue enjoyed by the local budget; giving priority to the tasks of spending on development investment, solidification of in-field canals, on education and training, science, technology and environment, the improvement of plant varieties and animal breeds, on crop and husbandry restructure; giving priority to repayment of borrowed capital (including communes� debts), expenditures on hunger elimination and poverty alleviation; expenditures on housing support for persons who had taken part in revolutionary activities before the 1945 August Revolution under the Prime Minister�s Decision No.20/2000/QD-TTg of February 3, 2000 and the Finance Ministry�s guiding Circular No.63/2000/TT-BTC of June 29, 2000; absolutely saving administrative expenditures, restricting the expenditures on equipment procurement and repair.

Continuing to apply the mechanism of arranging expenditures for a number of targets corresponding to the whole or part of a number of revenues (the agricultural land use tax for investment in the development of agriculture and rural economy, land rent and land use levy for investment in infrastructure�) like the 2000 budget structure.

In order to encourage the localities to enhance their revenue management, as from 2001, the policy of rewarding the State budget over-collection shall be applied to localities with the collection of export and import taxes, the special consumption tax on domestic and imported goods (excluding the value added tax on import goods) in excess of the estimates thereof as prescribed by the State Budget Law. The Finance Ministry shall provide detailed guidance after the Prime Minister issues the decision thereon. The over-collection rewards mentioned above shall be used for investment in the construction of socio-economic infrastructure of the localities, for additional allocations and support for State enterprises, and addition to the funding for performance of important and newly arising tasks of the localities.

II. MAJOR CONTENTS OF THE 2001 STATE BUDGET REVENUE AND EXPENDITURE ESTIMATION

1. Regarding the State budget revenue:

1.1. For the State enterprises: Detailed calculation must be made for every unit in the geographical areas under management; when making the augmentation, the tax reimbursement must be separated; the value added tax on import goods of production units and business units must be separated from each other.

1.1.1. Regarding the value added tax: Calculated according to the VAT Law and its guiding documents, with attention being paid to some newly supplemented regulations such as: Circular No.05/2000/TT-BTC of January 12,2000 of the Finance Ministry guiding the tax declaration and payment for the electricity industry; Circular No.10/2000/TT-BTC of February 10, 2000 of the Finance Ministry guiding the declaration and payment of VAT on the business establishments� goods sold at their dependent cost-accounting affiliates in other provinces and cities and via sale agents at fixed prices for commission only; Circular No.49/2000/TT/BTC of May 31, 2000 of the Finance Ministry guiding in detail the amendments and supplements to a number of lists of goods and services liable to VAT and the VAT rates applicable thereto as well as amendments and supplements to a number of provisions on VAT.

Grounds for calculation of the value of sold goods and services liable to VAT and the value of purchased goods and services for use in the production and/or trading of VAT-liable goods and services when making the estimates:

- The production and business situation in 2000 and the prospect for 2001.

- The 2001 production and business plans of enterprises.

- The 2000 sale prices and the inflation rate projected for 2001.

- The economic and technical norms of each enterprise, which are approved by the competent authorities.

- The regulations on rational expenses subtracted for calculation of taxable incomes under the Law on Enterprise Income Tax.

1.1.2. Regarding the special consumption tax: Calculated according to Circular No.168/1998/TT-BTC of December 21, 1998 of the Finance Ministry guiding the implementation of the Government�s Decree No.84/1998/ND-CP of December 12, 1998 detailing the implementation of the Special Consumption Tax Law.

Particularly for canned beer, the tax calculation prices shall comply with the Finance Ministry�s Official Dispatch No.1752/TC-TCT of May 9, 2000. The price for calculation of special consumption tax (SCT) on canned beer shall be determined as follows:

SCT calculation price (VND/liter) = [The selling price (VND/liter) - 3,000 (VND/liter)] : [1 + tax rate (65%)]

1.1.3. Natural resource tax: Calculated according to the Finance Ministry�s Circular No. 153/1998/TT-BTC of November 26,1998 guiding the implementation of the Government�s Decree No.68/1998/ND-CP of September 3,1998 detailing the implementation of the Natural Resources Tax Ordinance (amended).

1.1.4. The enterprise income tax: Calculated according to the Finance Ministry�s Circular No.99/1998/TT-BTC of July 14, 1998 guiding the implementation of the Government�s Decree No.30/1998/ND-CP of May 13, 1998 which details the implementation of the Enterprise Income Tax Law; the Finance Ministry�s Circular No.89/1999/TT-BTC of July 16, 1999 guiding the implementation of the tax regulations applicable to investment forms under the Law on Foreign Investment in Vietnam.

- To ensure the strict management and calculation of enterprise income tax estimates for enterprises with profitable production and business. On the basis of determining the elements of the enterprises� general expenditures in 2000 and the elements of expenditure increases or decreases projected for 2001, to calculate the enterprise income tax. Concretely as follows:

- The production and business expenditures shall be estimated according to the level of the second quarter of 2000, including 5% of the expenditure cut for thrift practice.

Particularly for the additional income tax:

Business establishments with high incomes, besides having to pay the income tax at the rate of 32%, shall also have to pay the additional income tax at the tax rate of 25% for the remaining income amount which is higher than 12% of the value of capital being in possession of the owners at the time of final annual settlement.

1.2. Foreign-invested enterprises:

1.2.1. Value added tax:

- The VAT calculation by deduction method: similar to that applicable to the State enterprises.

- VAT imposed on foreign contractors and subcontractors that adopt the accounting regime of Vietnam shall be paid by deduction method prescribed in the VAT Law. For foreign contractors and subcontractors that do not adopt the accounting regime of Vietnam, VAT shall be paid by direct calculation method according to Circular No. 169/1998/TT-BTC of December 22, 1998 and Circular No.95/1999/TT-BTC of August 6,1999 of the Finance Ministry.

1.2.2. Enterprise income tax: Regarding the tax rates, they shall be calculated according to Article 38 and Article 43 of the Law on Foreign Investment in Vietnam and Clause 3, Article 10 of the Enterprise Income Tax Law.

The enterprise income tax levied on foreign contractors and subcontractors that adopt the accounting regime of Vietnam shall be calculated according to Circular No.99/1998/TT-BTC. For foreign contractors that lack grounds to determine the taxable income and do not adopt the accounting regime of Vietnam, the enterprise income tax shall be determined in percentage of the taxable turnover of each business line prescribed in Circular No.169/1998/TT-BTC of December 22, 1998 and Circular No.95/1999/TT-BTC of August 6, 1999 of the Finance Ministry.

1.2.3. Regarding land, water surface and sea surface rentals:

- Calculated on the basis of the Finance Minister�s Decision No.179/1998/QD-BTC of February 24, 1998 promulgating the regulation on land, water surface and sea surface rentals applicable to forms of foreign investment in Vietnam.

- Calculated on the basis of the decisions on land rental exemption or reduction of the agencies competent to grant the investment licenses.

- The time for land rental calculation shall be the time when the enterprises are assigned land for use. In cases where the enterprises use the land before the land assignment, the time for calculation land rental shall be counted from the time the enterprises use the land.

1.2.4. Tax on transferring abroad incomes of economic organizations and individuals:

Pending the amendments and supplements to the Foreign Investment Law, it shall be temporarily calculated as follows:

- Determining the income transferred abroad according to the provisions in Circular No. 99/1998/TT-BTC of July 14, 1998 of the Finance Ministry.

- The tax rates inscribed in the investment licenses granted by competent agencies, after obtaining the written consent of the Finance Ministry. There are three rates of tax on transfer of profits abroad.

+ The legal capital of up to USD 5 million, the tax rate is 7%

+ The legal capital of between over USD 5 million and under USD 10 million, the tax rate is 5%.

+ The legal capital of over USD 10 million, the tax rate is 3%.

1.2.5. Tax on oil and gas production and exploitation activities:

Based on the paid output and oil selling prices. The budget remittance levels shall be determined on the basis of the proportion of State budget remittance against the total turnover according to the current regime.

1.3. Tax applicable to non-State industries, trade and services:

1.3.1. For production and business households:

- For fixed business households: Scrutinizing all business households, putting untaxed households under management for license tax collection. On the basis of the number of households liable to license tax and the license tax rates, households with fixed business locations are expected to be subject to the calculation of value added tax and enterprise income tax.

- For joint- stock companies, limited liability companies, private companies, cooperatives, production groups: Tax shall be calculated specifically for each enterprise, particularly big enterprises.

1.3.2. Regarding tax: It is calculated under the guidance in Circular No. 84/1999/TT-BTC of July 1st, 1999 of the Finance Ministry guiding the estimation of the 2000 State budget.

1.4. Revenue from construction lottery activities: It is calculated under the guidance in Circular No.84/1999/TT-BTC of July 1st, 1999 of the Finance Ministry guiding the estimation of the 2000 State budget.

1.5. Registration fee: According to the Finance Ministry�s Circular No.28/2000/TT-BTC of April 18,2000 guiding the implementation of the Government�s Decree No.176/1999/ND-CP of December 21, 1999 on registration fee.

- The registration fee calculation bases shall be the registration fee calculation price and the registration fee rate (%).

- The registration fee calculation price shall be the value of assets subject to registration fee according to domestic market prices at the time of registration fee calculation.

- The registration fee rates shall be as follows:

+ House, land: 1%

+ Ships, boats: 1%. Particularly for offshore fishing vessels: 0.5%

- Automobiles, motorcycles, hunting guns, sport guns: 2%. Particularly for motorcycles with their registration and registration fee payment made in Vietnam from the second time on: 1%

1.6. Tax on land use right transfer: According to the Government�s Decree No.19/2000/ND-CP of June 8, 2000 detailing the implementation of the Law amending and supplementing a number of Articles of the Law on Land Use Right Transfer Tax.

1.7. Charge and fee collection:

- All kinds of charge and fee in localities under their management shall be calculated for collection; separately summing up the charges and fees managed respectively by the central government, provinces, cities, districts and communes.

- Calculating in detail all kinds of charge and fee accounting for large proportions.

- Making detailed estimate for each kind of charge and fee: the collected charge and fee amount; the amount left for payment of expenses for collection management, for performance of assigned tasks; the amount remitted into the State budget.

1.8. Regarding export tax, import tax, value added tax on import goods, special consumption tax, collected by Customs offices:

Based on the provisions of the Export and Import Tax Law (amended and supplemented), the Special Consumption Tax Law and the Value Added Tax Law� as well as the export and import business situation, the Customs offices shall have to coordinate with concerned ministries, branches and localities in elaborating the collection estimates of import tax, export tax, special consumption tax on import goods and collections related to export and import activities.

1.9. Regarding collection from foreign loans and aids: Based on the signed agreements and commitments and their amended or supplemented provisions (if any), based on the implementation tempo of projects, to draw up detailed estimates of collection from foreign debts and aids according to each project, each ministry, each branch and locality, and clearly define the use purposes: for development investment, regular expenditures.

2. Regarding the State budget:

The ministries, central agencies, the budget drafting units at all levels must elaborate their 2001 State budget expenditure estimates within the amounts already notified thereto; on the basis of prescribed spending norms and regimes, the assigned task volume, funding shall be concentrated on major important tasks, practicing absolute thrift and combating wastefulness, In elaborating the 2001 budget expenditure estimates, each branch, each ministry, each central agency and each locality shall have to continue grasping firmly the policy of socialization. Combining the State budget sources and other sources mobilized from the society according to prescribed regimes for the better performance of tasks of each branch, each unit. Concretely for a number of major domains as follows:

2.1. For expenditure on development investment:

2.1.1. Expenses for capital construction:

The State budget capital shall be invested only in infrastructure projects which can neither yield profits nor recover the capital. The concentrated capital construction expenditures shall be arranged according to the following order: giving priority to key projects of the State and localities; irrigation projects, anti-natural calamity projects; projects to be completed and put into use in 2001, efficient projects carried forward from 2000; allocating sufficient reciprocal capital to ODA- funded projects; allocating capital for materialization of the program for solidification of inter-field canals; repayment of capital advanced in the previous years; allocating capital for the capital construction volume performed in 2000 but not yet paid; the remaining amount shall be allocated to new efficient and urgent projects, in which, for Group C projects, 70% must be allocated to uncompleted projects; projects just starting the construction shall be allocated capital for completion within no more than 2 years.

Projects to be allocated with the 2001 capital must go through all procedures for capital construction investment and be ratified before October 2000.

For projects invested with sub-lent loans, the project owners shall have to take initiative in arranging reciprocal capital in accordance with the contents of the signed agreements and domestic financial regulations in order not to affect the project implementation tempo.

- Continuing to make investment back in the petroleum industry with post-tax profits enjoyed by Vietnam from the VietsoPetro joint venture according to the Prime Minister�s regulations.

- Continuing to implement the mechanism of arranging investment capital for socio-economic infrastructures, social welfare projects, for housing fund development, agricultural and rural development with attention paid to the improvement of plant varieties and animal breeds; regeneration of forest funds from the local budgets from various sources; the collection of land use right assignment fee, land rental, construction lottery, proceeds from the sale of State-owned houses, agricultural land use levies, forest resource tax� which shall be the same as in 2000.

- Continuing to implement the mechanism of arranging expenses for socio-economic infrastructure development projects from the sources of collection of hydro-electric water resource tax, for investment back in bordergate economic zones already decided by the Prime Minister.

2.1.2. Regarding expenditures in support of production and business:

- Concentrating the support for the production of a number of key products, for key branches; providing capital support for enterprises doing business with efficiency, producing export goods, support for the search and expansion of markets, the consumption of commodity products, chiefly farm produce.

- Support for the improvement and production of plant varieties and animal breeds.

- Expenses in support of public-utility activities, public-utility enterprises with revenues being not enough to cover expenditures, enjoying support as stipulated by the Government.

2.1.3. Expenses for offsetting the difference of interest rates on development investment credit loans of the State shall comply with Circular No.43/2000/TT-BTC of May 23, 2000, Circular No. 53/2000/TT-BTC of June 6, 2000 and Circular No.59 TC/TCNH of September 27, 1996 of the Finance Ministry.

2.1.4. Regarding the State reserve expenditure: Based on the assigned State reserve tasks, branches and units shall have to evaluate and determine their reserve levels by December 31, 2000; to project the levels of reserve addition of each kind of goods, supplies, and elaborate the State reserve expenditure estimates for preservation of their reserve goods in 2001.

2.2. Regarding expenses for price subsidies for policy commodities:

- The expenses for price subsidies, freight subsidies for policy commodities for mountainous regions prescribed in Decree No.20/1998/ND-CP shall be calculated according to Joint Circular No.11/1998/TT-LB/BTM-UBDTMN-BTC-BKHDT of July 31, 1998. Regarding expenses for price subsidies for the purchase of agricultural products for localities, they must be reviewed for proper policy adjustment.

- The expenses for price subsidies for preservation of original breeds, press price subsidies, publishing house subsidies, cinematographic subsidies� shall comply with the current regimes. The ministries, localities and units should thoroughly calculate the price subsidy expenditures based on the clear determination of the quantity, production cost, transportation cost, specific subsidy level for each kind of commodity in strict accordance with the prescribed regime.

2.3. Regarding administrative and non-business expenditures:

- To continue allocating funds for the cause of education and training as well as science, technology and environment according to the Resolution of the Party Central Committee�s second plenum; regarding the State budget nationwide: allocating funds for expenditures (including expenditures for investment, regular spending, aid and loan spending, expenses for wage increase�) on education and training in 2001 at the level of 15%, on the science, technology and environment at the level of 2% of the total State budget expenditures, and at the same time adjusting the expenditure structure in a scientific manner in order to ensure the efficiency and practicality requirements. For culture and information sector, expenditure funding shall be allocated according to the Resolution of the Party Central Committee�s fifth plenum.

- Non-business economic expenditures should be concentrated on a number of key fields; each branch and each locality shall study and adjust its own expenditure structure in order to ensure high efficiency, contributing to boosting the economic development.

- The non-business expenditures on healthcare, physical training and sports must be arranged in a rational and economical manner, revising all tasks and programs in order to ensure high efficiency, allocating adequate funding for implementation of policies and regimes already promulgated by competent authorities.

- To allocate fund for administrative expenditures (on State management, activities of Party organizations and mass organizations): Correctly calculating the spending norms as prescribed, absolutely saving expenditures on guest reception, conferences, outbound delegations, inbound delegations,�

- For spending tasks using loan capital or aid, detailed estimate should be elaborated according to each project and the Vietnamese party�s reciprocal capital should be fully calculated according to commitments and prescribed regimes.

- Expenses for scientific, healthcare and training activities of State enterprises under the ministries shall be accounted into the production-business costs as prescribed in Decree No.27/1999/ND-CP of April 20, 1999 of the Government; from 2001 on, State budget subsidies shall not be allocated (except cases decided by the Prime Minister).

- In 2001, a number of administrative and non-business units with revenues shall be converted into those with self-financing of their expenditures according to the Prime Minister�s decisions.

- In the course of estimating expenditures of administrative and non-business units with revenues, it is necessary to fully report on the tasks of spending from the sources of collected charges and fees and other collections retained for expense coverage according to the current regulations.

2.4. Regarding expenditures on implementation of target programs:

For the national target programs: Continuing to allocate funding thereto and implementing the management mechanism provided for in the Prime Minister�s Decision No.38/2000/QD-TTg of March 24, 2000 and the Finance Ministry�s Circular No.41/2000/TT-BTC of May 19, 2000. For the other target programs, from 2001, the estimates shall be included in the budget expenditures of the ministries and localities.

III. ORGANIZATION OF IMPLEMENTATION

1. The ministries and other State bodies shall, according to their assigned functions, have to set the socio-economic norms in the fields under their respective management and promptly notify them to the Finance Ministry, other ministries, central agencies and localities before the time of the State budget estimation as stipulated in legal documents guiding the implementation of the State Budget Law, which shall serve as basis for making the 2001 State budget estimate.

2. The ministries which manage the national target programs and other target programs shall have to study and submit to the competent authorities before September 2000 for decision: the national target programs continued to be implemented in 2001, the target programs to be converted as from 2001 into the budget expenditures of the ministries and localities, to serve as basis for arrangement of the 2000 budget estimates.

3. The ministries, central agencies and the People�s Committees of the provinces and centrally-run cities shall base themselves on this Circular and the examined figures on 2001 State budget revenue and expenditure estimates notified by the Finance Ministry for implementation: to guide and notify the examined figures, organize discussions and augmentation of the 2001 State budget estimates strictly according to the contents prescribed in this Circular.

4. The Finance Ministry shall organize working sessions with other ministries, central agencies and localities to discuss the 2001 budget estimates during the period from mid-August to September 15, 2000 (the concrete timetable shall be notified later).

After the 2001 State budget estimates are approved by the National Assembly, the Finance Ministry shall organize working sessions with other ministries, central agencies and localities on the 2001 budget estimates before submitting to the Government, the National Assembly Standing Committee the plan on distribution of the 2001 State budget estimates.

5. The General Department of Customs, the General Department of Tax and the concerned Departments shall have to guide in detail this Circular to their attached units for the elaboration and augmentation of the State budget revenue and expenditure estimates in their assigned fields.

Regarding set forms for 2001 State budget revenue and expenditure estimate elaboration and report:

- The ministries and central agencies shall guide their attached units to elaborate the State budget estimates and make the report thereon; thereby make sum-up reports to the Finance Ministry on their respective 2001 State budget estimates in strict accordance with the guided forms and tables and the time limits prescribed in Circular No.103/1998/TT-BTC of July 18, 1998 of the Finance Ministry.

- For localities: In order to augment and submit to the National Assembly the State budget revenue and expenditure estimates for all four budget levels (central, provincial, district and commune budgets), as from 2001, the provincial/municipal People�s Committees are requested to direct and guide the subordinate local administrations to make full budget revenue and expenditure estimates according to set forms and tables prescribed in Circular No.103/1998/TT-BTC of July 18,1998 of the Finance Ministry and augment the budget revenue and expenditure estimates of the commune and equivalent levels according to set forms and tables for sum-up and report to the Finance Ministry. With regard to set forms and tables of report on budget revenue and expenditure estimates of the provinces and centrally-run cities, promulgated together with Circular No.103/1998/TT-BTC of July 18, 1998 of the Finance Ministry, the column on 1999 settlement data norm (for Appendix 1: tables No.1, 2 and 7; for Appendix 6: tables No.5, 6, 7, 17, 18) shall be added according to enclosed appendices.

6. In the course of making the 2001 State budget estimates, if any new policies and regulations are issued, the Finance Ministry shall provide additional guidance and notices when they are implemented; if any problems arise, the ministries and localities are requested to report them to the Finance Ministry for timely handling.

For the Finance Minister

Vice Minister
PHAM VAN TRONG